LOS ANGELES — The San Diego County Water Authority on Wednesday priced a $299 million refunding expected to provide $51 million in net-present value savings through 2034.
JPMorgan, Citigroup and Morgan Stanley are the underwriters involved in the sale, which is expected to close in four weeks, and will refund $299 million in long-term, fixed-rate bonds from the agency’s 2004A series.
Officials from SDCWA, a public agency comprised of 24 member agencies serving the San Diego region as a wholesale supplier of water, attributed their ability to achieve favorable financing terms to strong credit ratings and aggressive investor outreach.
“Our strong fiscal policies and credit ratings allowed us to reduce our borrowing costs again, despite challenging market conditions,” SCDWA Board Chairman Thomas Wornham said in a statement.
SCDWA holds long-term senior lien credit ratings of AA-plus from Standard and Poor’s and Fitch Ratings, and Aa2 from Moody’s Investors Service.
This week’s sale is part of a long-term plan by the water authority to cut the cost of financing its capital improvement program, officials said. Combined with this transaction, SCDWA has saved $67.5 million through refundings over the past three years.
In July 2011, SCDWA executed a $139.9 million senior lien bond sale saving $13.5 million over 15 years. In September 2011, SCDWA saved $5.2 million on a $94.5 million bond refunding.
SCDWA is nearing completion on a $3.6 billion capital improvement program involving a two-year appropriation of $324.4 million for fiscal years 2012 and 2013, officials said. Payments on debt to finance these capital projects – vital infrastructure such as dams, large-diameter pipelines, a treatment plant and hydropower facilities – amount to a significant cost. The Water Authority estimates debt service costs represent $280 million, or 20 percent of its total budget, for fiscal years 2012 and 2013.
“This is the capstone of a successful bond refinancing strategy that will benefit ratepayers for years,” Wornham said.
